Archive for January, 2015

Budgeting woes…

Sometimes budgeting can be discouraging.

For me, that happens when goals suddenly change.  In my most recent case, I had two major expenses change in big ways on the same day.

One expense turned out to be $400 more than I expected.  Let’s call that Expense A.

Expense B was also about $400 more than expected and could not be paid the way I had planned.  This expense is one that gives a discount if it’s paid early.  My plan to pay it was to charge it to a 0% credit card, then start paying it down in a few months, and pay it off over about 9-10 months.  Unfortunately, payment by credit card was not allowed as it had been in the past.  This meant I had to overhaul my budget so that I could save up several thousand dollars in the next 6 months to meet the “early” deadline.

The overhaul required taking money out of my Emergency fund, stripping out my rainy day funds (money being saved for Christmas, Home Insurance, Property Tax), and take contributions out of my car replacement category  (driving an ’06 now), and a few other smaller categories intended for home improvement projects.

Now, my Christmas, Home Insurance, and Property Tax categories must be completely funded during the last 6 months of this year.  My new plan shows me putting a whopping $162.37 in my car replacement category by December 31st.  In August, I start saving about $600 a month for Expense A for next year.

It’s only January 27th, and my financial year looks pretty bleak.

But, there is hope.  Thanks to my budget, I have a plan!

Trying to handle these expenses without a budget…  Well, that would just be crazy.  I’d end up putting lots of spending on credit cards, building up debt.  I’d be very worried about making sure all the bills were paid.  It would be much more stressful, especially when additional surprise expenses show up (which they always do).

So, while I do see some woe, I also see the hope.  And I know that I would not be able to do the things I’m doing with my money without a budget.

January 27, 2015 at 11:22 pm Leave a comment

WiseBanyan Review

I looked into a service called Betterment some months ago.  It’s an interesting concept whereby you set up regular deposits into your Betterment account, and they invest all of your money in a diversified portfolio for you, automatically.  Your $25 or $50 deposit can get invested immediately in a diversified basket of stocks, bonds, REITS, etc.

Sounds like an excellent idea for auto-investing, but here’s the rub.  They have fees.  These fees aren’t so bad when you have a big chunk of change invested with them, but since I had a pretty small amount to get started with, I’ve avoided them so far.

About two months ago, I read about a service called WiseBanyan.com.  Essentially, they are exactly like Betterment, with one big difference.  They are completely fee free.

One thing I wasn’t excited about with WiseBanyan was the waiting list.  They are rolling their product out over time, and are allowing you to “skip the line” by getting 5 friends to sign up.  If you want to skip the line, now that I’m a member, you can use my link to get an account right away:  Skip the line at WiseBanyan!

Once I had my invite, I had to pick my account type.  Fortunately, they offer a full range of account types:  Personal Investment, Roth IRA, SEP IRA, and Traditional IRA.  You can even do a roll-over, but I think that’s a more manual process.

After selecting my account type, I filled out a questionnaire to determine my risk score.  This score is the “dial” that you have control over, to select your investment mix.  You can’t specify your exact asset allocation.  No matter what your score is, the funds your money is invested in are exactly the same.  Based on your risk score, it changes the percentages that go into each investment.  The higher the risk score, the higher your investment in stocks.  The lower your score, the more you invest in bonds and other low risk investments.  If you don’t agree with the risk score that is assigned when filling out the questionnaire, you can simply select the value you prefer.

It took about 5 business days to get my account set up.  After your account is set up, you can log into it and see your actual allocation.  Aside from seeing your current balance and mix of investments, their interface lets you alter your risk score, set up additional accounts, and perhaps most importantly, you can deposit additional funds on a one-time basis (minimum $10 deposit), or setup/adjust your auto-deposit amount and frequency.  You can opt to auto-deposit money Weekly, Monthly, or Quarterly.  The last option is “Pause”, if you wish to stop the auto-deposit process for a time.

I was originally signed up to have a $100 auto-deposit once per month, but changed it to $25 weekly for two reasons:
1.  Dollar-cost averaging.  By putting in smaller amounts of money more frequently, I’m likely to pay a lower overall cost for my basket of investments.
2.  I am paid every two weeks, not once per month.  This means I’ll be able to contribute an extra $100 per year, probably without even missing it.

I’ve had the service for about two weeks, and I’ve seen the value of my account dip down about two percentage points, but now it has reversed course and I’m on the plus side, though just barely.  Of course, that’s just the market.  Overall, I’m extremely pleased with the service.

January 20, 2015 at 11:06 pm Leave a comment

Robinhood – Free stock trading – Update

Just a quick update.  My Robinhood account was opened early last week and I started the process of transferring a little money to it.  Transfers to the service seem to take about 3 business days, which seems a bit longer than other similar services.  So far, they don’t seem to take it on faith that you have the money, so you can’t start trading with it the same day you initiate a transfer, but you have to wait for it to clear.  Perhaps that will change once I’ve been with the service for a while.

My first trades

Friday morning, I was able to complete my first trades with the service.  I was able to set Limit orders and the IOS app sent me a notification when my purchases went through.  Market orders seem to go through almost instantly.

Over the course of several hours, I purchased 8 different stocks, as few as 3 shares per order.  Sadly, 7 of them ended the day down, not that Robinhood had anything to do with that.

Negatives

First of all, there’s only an IOS app today.  I know android users are feeling left out here, but I understand they are working on that.  Personally, I prefer a web platform.  Maybe I just like seeing more information on the page at a time than you get with an IOS app.

News?  What news?  I’m used to the IOS Stock tracking app, which lets you easily see news stories about each stock.  I’d like to see something similar in Robinhood, so I don’t have to go to other apps to see what’s going on with my stocks.  Of course, this could encourage frequent trades, so perhaps this is really a plus.

I can’t buy every stock I want…  I added all of the stocks I’m currently interested in to my watchlist, and one of them does not show up with a “BUY” button.  I’m not sure which exchange it’s on, but it seems that there might be some exchanges Robinhood doesn’t cover yet.  The actual stock I have this issue with is CLB.

Overall

I’m impressed.  So far, everything is as advertized.

This looks to be a great way to purchase small orders of stock with no fees.  That’s extremely important if you are an investor without a lot of money to invest at once.

Basically, this is replacing long-term savings for me.  I’m likely to add a few hundred per month to my account, and pick up a couple of shares of stock with it.  I don’t plan to do this with money that I’ll need in the next 6 months or so.  Instead of socking my long-term savings away in an account earning a *YAWN* whopping 1%, I can put it into a stock, bond, REIT, ETF, etc.  And while these investments can lose value, if invested in a diversified manner, it is likely to return far more than 1% a year.  Heck, it’s likely to earn about 10% a year if you just invest in an index fund.

Another thing – Robinhood will let me take full advantage of dollar-cost averaging, something I have been hesitant to do with other services due to the $10.00 fee for each trade.  With Robinhood, as soon as my deposit clears, I can start buying without worrying about paying junk fees.

January 11, 2015 at 8:04 pm Leave a comment


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